Rank Robustness of Composite Indices

OPHI Working Papers

Many common multidimensional indices take the form of a ‘composite index’ or a weighted average of several dimension-specific achievements. Rankings arising from such an index are dependent upon an initial weighting vector, and any given judgment could, in principle, be reversed if an alternative weighting vector was employed. This paper examines a variable-weight robustness criterion for composite indicators that views a comparison as robust if the ranking is not reversed at any weight vector within a given set. We characterize the resulting robustness relations for various sets of weighting vectors and illustrate how they moderate the complete ordering generated by the composite indicator. We propose a measure by which the robustness of a given comparison may be gauged and illustrate its usefulness using data from the Human Development Index. In particular, we show how some country rankings are fully robust to changes in weights while others are quite fragile. We investigate the prevalence of the different levels of robustness in theory and practice and offer insight as to why certain datasets tend to have more robust comparisons. 

Authors: James Foster, Mark McGillivray and Suman Seth

Year: 2009

Citation: Foster, J., McGillivray, M. and Seth, S. (2009). 'Rank robustness of composite indices', OPHI Working Paper 26, Oxford Poverty and Human Development Initiative (OPHI), University of Oxford.

This paper is also published in the Econometric Reviews, 2013, Vol. 32(1), pp. 35–56.

See also OPHI Working Paper 26b, 2012, 'Rank robustness of composite indices: Dominance and ambiguity' by James E. Foster, Mark McGillivray and Suman Seth.

Keywords:
composite indicator, multidimensional index, Human Development Index, weighting vector, robustness, positive association, rank correlation, Kendall’s tau

Related publications

Authors
James Foster, Mark McGillivray, Suman Seth
Series Name
OPHI Working Papers
Publication date
2009
JEL Codes
I31, O12, O15, C02
Publication Number
WP 26